VA Pays $197 Million In Fraudulent Contractor Scheme
Three companies located in Milwaukee created a shell company scheme that fraudulently received $197 million in set-aside contracts according to federal investigators. Overall, the companies swindled $268 million in contracts between SBA and VA.
The construction contracts were intended for veteran-owned businesses and service disabled veteran-owned businesses. The fraudulent scheme basically involved placing veterans in positions of authority who were not actually present on the job site.
The companies had their VA contracts suspended once the agency became suspicious that the man running one of the companies was not the true owner. After flubbing investigators at the time, in 2012, VA reinstated the firm’s contracting privileges.
The present investigation is an example of how deserving veterans are scammed out of contract offerings by sharks willing to lie, cheat and steal. It is an old problem that VA has yet to sort out.
The shell companies were basically run by the same crew who moved a veteran in an out of the business to take advantage of contract deals they were not otherwise entitled to receive.
FRAUDULENT CONTRACTOR SCHEME
According to Milwaukee Business News, the fraudulent contractor scheme was basically broken down into three companies.
“The search warrant says the owner of one of the companies was certified for the SBA program during the 1990s and early 2000s.
“After graduating from the program, the affidavit says he helped a former employee become the purported owner of a new company that sought contracts under the SBA program. The affidavit says the original owner was actually in control of the second business and benefited from contracts he was not eligible for.”
“The purported owner of the second business was rarely in the office and moved to Minnesota not long after the company was established, the affidavit says. A confidential source, described as a 14 year employee of the two companies, told investigators an office with papers and personal effects on the desk was maintained at the office “to create the illusion” the second owner was controlling the company, the affidavit says.
“The document also says a project manager from the original company was actually controlling the second business on a daily basis.
“The second company graduated from the SBA program in 2013, according to the affidavit.”
Company 3, The Veteran-Owned Business
“The original owner and the project manager sought to also establish a service-disabled veteran-owned company, the document says. In 2006 they allegedly “selected and placed” a man they met while doing work for the VA as head of the new company.
“The third company was able to secure a number of contracts between 2006 and 2012, although a non-winning bidder did question the company’s status as service-disabled and veteran-owned in 2010.
“The confidential source told investigators the man the duo selected did not run day-to-day operations and was not physically present in the building for months at a time, according to the affidavit. After the company’s status for VA contracts was suspended in 2012 over suspicions the man was not the true owner, the affidavit says he began showing up on a regular basis.
“The company was reinstated after claiming the project manager was removed from the payroll, but the affidavit says he simply moved to adjacent office space and was still running daily operations.”
That is basically how a lot of scammers try to work around the system. Some large companies also do the same by placing veterans and minorities into positions of authority within existing company models in order to secure contracts intended for true veteran owned businesses.
Meanwhile, many true veteran owned businesses, not shell companies, struggle to gain access to the same contracts. Somehow this problem of fraud has plagued VA for so long, that one must wonder if some bigger plan is afoot to swindle the needy out of opportunities to which they are entitled.
Happy birthday Nam. Your comments are listened to and appreciated Sir.
The VAOIG third party contractors have the help and protection of the police in going about their criminal activity. When there is a confrontation or misunderstanding the veteran is always the one at risk. My opinion!
Let us validate your opinion logically;
One set of people in your post during any altercation of any kind is protected by body armor, K9 units, video surveilance feeds, logistical radio support, established interlocking fields of fire and tactic, and VA regulations and policies which are as fluid as any river I have seen.
The other set of people are sick. Many have no support in life at all. Some have logistical problems eating or finding a place to sleep. Many have to sleep down by the river at night.
One group in that set is clearly either completely unable to pose a serious and deadly risk to the other group, and the other group is just the opposite.
Is it my (overworked) imagination, or a de jevue, where there have been other articles on Ben’s site, or elsewhere concerning this issue of today’s blog?
Seems I’ve read where veterans have either ripped off VA. Or the VA wasn’t giving disabled veterans a chance of receiving contracts!
Yes on both, elf. The VA goes ‘both ways’ when it comes to fraud and corruption. Then there’s that VA Employee (upper management) that has that scam of a Veteran Charity where paltry % ever went anywhere near a Veteran, and remember his big shiny collector’s car the Bad VA Art of article had?
The VA is rife with fraud and corruption but God Forbid a Vet should say anything threatening on a freaking suicide hotline for Vets from the VA…should only be talking about the weather and where the next Hungry Hungry Hippos game will be….do NOT talk about any problems and esp. about problems with access to care!
(local news said the VA only stated they are seeing more and more troubled Vets from these wars…no shit)
I believe you are remembering a guy called out by Congress for claiming to be a disabled vet getting contracts. If I recall correctly, he claimed an injured foot or ankle, but he couldn’t remember which one.
Elf you aren’t wrong about it being “de jevu” but that’s french. Pardon my english, but we say the same word as “script”.
Golly isn’t it odd that VA is so closely affiliated and feeding money to a criminal organization??? Doggone it anyway.
At, AFGE, We bring good government to the people. Sometimes those people get caught….but not many of them…and not too often. Shucks and golly.
A quick perusal of the agencies that were completely and utterly oblivious to this bleeding artery of American criminality probably include; VA, SBA, OIG, OPM, IRS, FBI, POTUS, CONGRESS, AFGE, and I think likely additionally a vast array of very well educated folks who usually spot the forest despite the trees.
Isn’t it just a darn coincidence that this thing slipped by all those people? Gotta log now. There is a huge lottery coming up. I am putting all my life savings on a random ticket……I am feeling lucky.
Unfortunate breaking news here in Ohio and yes, it involves the VA and a Vet, where the VA reported a Vet’s comments made on a suicide chatline and VA dispatched authorities…:
“PICKAWAY COUNTY, Ohio — A man is dead after a shooting involving Pickaway County Deputies. It happened overnight in the small community of Five Points, north of Circleville. Pickaway County Sheriff Robert Radcliff and family members identify the man as Ronald Smith.
The Sheriffs Office isn’t releasing many details, but say two deputies responded to the home around 1:20am Tuesday after getting notice from Veterans Administration suicide prevention hotline. Sheriff Radcliff says Smith was in an online chat for veterans when he made a statement that “concerned” them but wouldn’t elaborate.
Deputies say when they got to the home, they were confronted by a man outside with a long rifle. Negotiators were called in but the confrontation escalated before they got there, leading to at least one deputy opening fire. The Sheriff’s Office has not yet said what led to the deputy opening fire, and wouldn’t confirm how many shots were fired.
Investigators say the man’s wife and two children, believed to be 10 and 14 years old, were home at the time. Family members say Smith served in the Army and served during Operation Desert Storm in Iraq. They say after the Army, he enlisted in the Air National Guard for four years. Neighbors say Smith was a kind man who would help whenever they needed, and they wished they could have helped him.
State BCI agents are at the scene working to collect evidence, and the Franklin County Sheriff’s Office is assisting with the investigation. Both deputies involved are on paid administrative leave, which is standard in officer-involved shootings. The Sheriff says both are also US Armed Services veterans themselves.
(more updates coming on story)
Morale of this unfortunate story is to be very aware of what you say and where and when you say it because the VA does not play nice, they overreact, causing an already distraught or upset with their shitty VA care to be like a cornered animal. More later on news…
You can be damn sure the VA is going to remain tight-lipped about what they took as “concerning”, so concerning that a social worker could not have been freaking dispatched that was on call…instead, send out the boys and girls with the guns? WTF?
But hey, if you want to be a shell corporation contractor for the VA to scam money, NO problem!
In a mood. My local news station reported the VA refused to elaborate….again, WTF? Ben, I hope you can dig around because something does not seem correct here. Is this what one can expect from VA Telemedicine? Say the wrong words and send in the clowns with guns after your ass?
The VA will kill veterans. Using s surrogate. !
He’s s danger to himself or other’s. Has been know to have guns. !
Beware. Armed and dangerous. May suffer from PTSD. !
Said he is mad at VA.
Making bad remarks about his treatment and were afraid he. (May. Harm us. ! )
Just like the veteran Who burned himself outside the VA and the two that killed themselves outside the VA in Denver. !
We ( the VA did nothing wrong. ) we’ve had problems with them being disruptive and they took their own lives.
By the way. What exactly did he say to get shot. !
Pitting law inforcement against veterans. What a way to wash your hand’s of responsibility. !
If the VA Would be doing their job’s. Veteran’s would not have to complain. !
Why are the police not arresting VA employees. Who are causing the problems !
Why are we sending our most precious source ( our children ) to defend a country that could care less. If they get killed or mamed or see thing’s a human being should not see.
How long before they send armed men to your house and they tell the authorities your a mennece and should be considered armed and dangerous. !
Again if the VA Would be doing their job’s and quit worring IF their going to get their bonous. !
Mayne there’s a new scam. Where employees get a bonous for each body bag. !
How. Dare veterans request proper care and expect us to be at the top of our game at ( Hungery Hippos. )
The nerve of them. Wish they would have been killed and then we won’t keep having these problems.
Does this shock me? Absolutely not at all. If you look at the $2 billion fiasco in Aurora, you likely have the same VA incompetents overseeing these contracts as you do Aurora.
Imagine a bad Voc Rehab counselor or Claims Rater, but on a much larger scale. There are incompetents or lazy slugs at every level of the VA, so why should this be any different?
How many businesses involved in these programs are ever looked at by someone in the VA for compliance?
One would assume the VA would require proof of service and company financial documents showing the company actually had veterans overseeing these companies, but we know what happens when one assumes.
Now, imagine the reams of proof the VA requires for a veteran to get health care, for a veteran to have their family listed as dependents, for a veteran to get Voc Rehab or travel pay, and ask yourself why the VA does not require the same thing involving significantly more money?
This kills me, as I have been fighting my VA for an item I have 3 Letters of Medical Neccessity for a year and a half. I hear excuses about how they don’t have the money, but It’s retaliation for filling in them before. I now have a pending claim for damages and OIG finally picked up my case on illegal activity here in Prescott, AZ. All for a device that is about $15,000.00, but I have used it before with great results, cutting back on a lot of Medications, especially pain Meds. Yes, they complain about how they are abused and are refusing to give Vets that need them. As I have to take 240mg’s of Oxycodone three times a day, breakthrough Oxy and 10mg’s of Valuim three times daily. They really don’t care about anything but saving a few dallors on us so they can spend 100’s of millions on scams. What a system.
Why does it take several years to eliminate fraudulent companies? I have reported several frauds, and they’re still frauds, stealing from legitimate SDVOSB’s. I use “Google” and can tell in minutes!!! Someone needs to apply the “Common Sense” factor here!!!
It’s a shame and a disgrace fraud has gotten so bad, someone’s got to be accountable!!!
Happy Birthday namnibor!
Millions and millions of dollars going to firms supposedly owned and controlled by Veterans selling their disability status. FYI the Denver Project is just drop in the bucket money wise.
Since you mentioned the money pit in Denver though I would repost the following from the other day.
Regarding the money pit in Aurora.
It appears that the hospital will be losing its imported Brazilian stone and will just have to make due with a cheaper Colorado rock as its replacement. Don’t worry though the subcontractor who pointed out the savings will get 30% of the total savings by replacing the stone.
Also the planned $10 million landscaping scheme has been slashed to a measly $2 million. I guess that grass seed must really be expensive in Colorado. I am sure the site is already very well covered in bull fertilizer so no need to fertilize the grass.
But again don’t worry because the subcontractor who thought of that savings will get 30% of the $8 million saved or $2.4 million for suggesting the cost saving changes.
Oh but there is a kicker—even though they have been finding cost saving ideas there is a problem with rising cost and they are no longer sure of the 2018 opening date or that they will be able to complete the hospital with the $1.7 billion budget.
So as taxpayers grab those cheeks, spread them, and bend over to smell the VA Roses again. Oh and lube isn’t in the budget so I am sure this one’s going to really hurt the wallet.
Guess all of those Politicians on their way out the door are getting ready for one last dip to reline their pockets at the Black hole in Aurora.
Source “Lavish Features Cut from over-budget Aurora VA hospital”
Today’s revelation begs to question how many hundreds of million$ have fraudulently skimmed from just the Denver VA Black Hole Project or the many other direly over-budget VA Contract Projects?
Just think what that $197 Million alone could have done for Homeless Vets and Veteran Suicide Prevention?
Someone other than the VA needs to control every penny the VA gets and keep a ledger…and watch the rats jump ship from cash starvation. AUDIT the whole damn VA!!!!!!!!!!!!!!!
What he said DOUBLE…
Happy Birthday nam.
One should ask, if the VA is well aware of contracting requirements having set-asides for veterans, why did it have to be pointed out to the VA that they should be buying veteran created art?
Pretty soon if congress stops the funding of the VA. The VA will have to resort to having veterans rounded up and VA claim their a danger to themselves or other.
Lock them up and force them to produce art. So they can sell it in order to afford their bonous monies.
Close the VA and problem solved. !
Arrest top management first. !
They are the ones causing all the problems and the veterans get the blame. !!!!
Justice for you. !
Turtle. Do waste your money. Just get a job at the VA and you will hit the Jack pot at the end of every year. !
All VA investigations out
FBI. Cid do their job
Hey…I’m a Vet…Where can I apply for that job…LOL (OK i’m just kidding y’all…Sheesh can’t you take a joke?)
Hey, Don. Maybe all vets, every one of us, can get in on this scam. At least that way everyone will get a piece of the pie!
Think VA has enough $$$$$ to pass around?
Just kidding! LMFAO!
@crazyelf– That “pie” would be cream de’poo pie. I only do moon pies. 🙂 Today is my b-day and I want my cake and I want to eat it too…no poo pie. 🙂
Happy B Day Namnibor.
What are you now 39?
Haha…nope, well into my 50’s. Thanks and thanks to elf as well. The Chinese restaurant I haunt for launch quite often had their employees sing happy b-day. Made my day and totally did not see it coming. Great family made food and great people.
I meant, “LUNCH” not “LAUNCH”. (It’s the Air Force Airman in me there talking)
When and IF they really follow the bread crumb$ it will more than likely show relatives and close friends involved in MANY VA contract $$$ schemes. Nepotism runs through the VA and Fed veins just as freely as the blood platelets do. Follow the damn money all the way!
However, I am afraid the VA will find a way to place all the blame on the Veterans scheming rather than contractor buddies. Wait for it….
OK, all together now. Say it in unison – “PAY OFF!”
A few hundred $ million here, a few hundred $ million there, the next thing you know, VA won’t be able to afford interior decorators and junkets to the Bahamas any more.
How about those lavish vacations to France. Where they can stay at the “5 star Pershing Hall Hotel!”
Or, maybe those lavish vacations to Disney in France or other countries.
Oh, the decisions, decisions!
“5 Star Pershing Hall Hotel!” in Paris France. You might want to call it what it really is. The Clinton Foundations Campaign headquarter Paris Office.
Mr. Nesler thank you for this link, so true VA in sad state, hope there will be some changes coming!
Don’t forget to check out past blogs by Ben. There’s plenty of “filthy dirt” on VA right here.
Another great site is;
They have other articles concerning VA’s corruption, waste, fraud and abuse!
Ben and the owners are friends!
Will anyone see prison time?
It is not hard to validate that a person is a disabled vet by the VA. Its also not hard to pull up Fed Tax ID’s, and State Corporation documentation showing who the owner of the company is.
But then again, if someone came up to a disabled vet who was screwed by the VA to begin with, it would not be hard to induce that person into becoming the owner of a corporation that would benefit from his/her status. A paycheck would really do for the Vet what the VA would not do, and for a 10 million dollar contract, its not hard to invest a 60k salary to the owner of that corporation to reap the benefits of a huge amount of profitability in his company.
Do you ever say anything new Reuben?
pendejo vets va dc hq is a federal rico crime racket run by afge union contractdss vets yo are so screwed by these va thug rats from hell !!!!!!!!!!!!!!!!!
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